We’ve been discussing the expected features on Apple’s iPhone 8 for a
few weeks now, including some specific features believed to be limited
to the highest-end 10th anniversary model, such as a massive 5.8-inch
end-to-end screen, integrated Touch ID functionality baked into the
display, and an OLED panel instead of the LCDs all previous iPhones have relied on.
Samsung has signed an agreement with Apple to provide a full 160 million screens for the Apple iPhone 8, according to the Korean Herald (we’ve heard rumors it could also be titled as the iPhone X,
though that’s scarcely confirmed). That’s surprising, for several
reasons. First, Apple only shipped 211 million devices last year, and
231 million in 2015. If Apple is ordering OLEDs for a full 76% of its
previous year in sales, it clearly expects the consumer response to be
massive. But that’s surprising given that the iPhone 8/X’s flagship
model is expected to cost $1m000. Even if the handset ships with a huge
number of new and unusual features, how many people will be willing to
pay four digits to get one? Apple’s average selling prices (ASPs) for
the iPhone as a whole hit $695 this past quarter, in a new record for
the company — but $1000 is a full 1.44x more than that.

SAMSUNG CSC

This implies one of three things: Either early reports that the Apple
iPhone 8/X would be the only model to ship with an OLED are wrong, or
Apple believes it will move a truly extraordinary number of iPhones,
regardless of the price tag it slaps on them. Granted, this has proven
to be true before. In the run-up to the iPhone 5S/5C, most speculation
focused on how the iPhone
would expand itself into new markets by targeting lower price points.
Instead, most sales focused on the iPhone 5S. While Apple still offers
an affordable small-screen phone in the iPhone SE, it never went down
the iPhone 5C path (with its colorful plastic body and lower-end feel)
again.

iPhone sales through 2016. Image by Statista.

The third possibility is the most prosaic but least exciting of the
two. It’s possible that Apple’s larger display order from Samsung
reflects the fact that the Cupertino-based company has decided to ship
its first halo phone with OLED, but that $1,000 hardware will
be a new price point that the company targets for at least two
generations, and that OLEDs will be reserved for this flagship device.
In this context, Apple’s decision to increase its OLED
order simply means it intends to use the same panels in more than one
phone generation. There’s nothing stopping companies from working out
multi-year supply contracts at once, after all.

I’m genuinely uncertain which of these is the most likely
outcome, mostly because there’s a case to make for all of them. Apple
could also decide to take 1-2 halo features (OLED and wireless charging,
for instance) and roll them out to the iPhone 8/X and the 7s Plus,
while keeping the iPhone 7s on a traditional LCD.